Chart Notes
- The change is debt is end of calendar year from the end of the previous calendar year.
- Alleged deficits are fiscal year distortions of reality.
The Big Deficit Lie
Nearly every year, debt rises more than the alleged deficit. This is not a fiscal vs. calendar year distortion, but an ongoing deficit lie.
For example, there were alleged budget surpluses in four consecutive years, 1998 through 2001. Yet debt only fell once, in the year 2000, by 113.875 billion vs a purported budget surplus of $236.241 billion.
2001 had a reported surplus of $128,236 billion. Yet ,debt rose by $281,223 billion.
Spotlight 2020 and 2021
For 2020, the reported deficit was $3.132 trillion but debt rose by $4.546 trillion. That’s a whopping negative discrepancy to the tune of $1.414 trillion.
For comparison purposes, in 2021 debt did not rise as much as the deficit. The deficit was $2.776 trillion but debt only rose by $1.869 trillion.
Those are Covid-related fiscal vs calendar year anomalies. Regardless, debt is high and rising, generally mush faster on average than reported deficits.
Debt vs Deficit Q&A
Q: Why does public debt generally rise more than the alleged deficit?
A: Mainly because deficits are a lie.
Here’s the long answer.
Because the projected deficit does not include all of the amount owed to the Social Security Trust Fund. That amount is called off-budget. But when the calendar year rolls over, the difference magically appears on the balance sheet as actual debt.
Deficit Scam
Excluding Social Security from the the fiscal year deficit is a purposeful accounting scam to make deficits appear smaller than they are.
Debt Through Calendar Year 2021
Only once, did debt shrink. That was in 2000. Those numbers are through 2021.
US Debt Clock to the Second
The DebtClock graph updates every second. If you have not yet visited the site please take a look.
2022 Math
- The 2021 year end debt was $29.621 trillion.
- The alleged fiscal year 2022 deficit is $1,375 trillion.
- 2022 is not over but debt has already risen by $1.687 trillion.
Looking Ahead, Expect Worse
The ongoing story is even worse. Congressional projected deficit assume no recession ever, and never do.
We are adding trillions in debt every year and it will get much worse. Interest on debt will soon hit $1 trillion a year.
A Proposed Fix
..Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!
— Donald J. Trump (@realDonaldTrump) August 5, 2018
No, we do not have better trade deals, and no, tariffs did not reduce public debt. Nearly 50,000 economic illiterates like that Tweet.
Since Trump’s 2018 Tweet, public debt rose by over $10 trillion.
When does this matter?
I don’t know. You tell me. Just don’t pretend it will never matter because it will.
This post originated at MishTalk.Com.
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Mish
Doing so paints a dark picture for the US where debt/revenue ratios are significantly worse than Greece or Italy.
To appraise the effect of the Federal budget deficit on
interest rates, it is necessary to compare the deficit, not to a debt to
N-gDp-ratio (a contrived figure), but to the volume of current net private
savings made available to the credit markets.
These outsized deficits require that the Federal Reserve
monetize a large proportion of the deficits, current and future.
charges on debt are related to a cumulative figure; and since the multiplier
effects of debt expansion on income, the ingredient from which the charges must
inevitably be paid, is a non-cumulative figure, it would seem that the time
will inevitably arrive when further debt expansion is no longer a practical or
possible expedient, either to provide full employment or to keep debt charges
with tolerable limits
alone is adequate as a guidepost for monetary policy. In Alfred Marshall’s
“Cash Balances Approach” (the demand for money), K = “the length of the period
over whose transactions purchasing power in the form of money is held”. K is
related to Vt; it is the reciprocal.
removed from the banks, the banks have less money to lend, and liquidity dries
up.”
now finding better use for some of their cash than depositing it at the bank
and earning nearly no yield, while for example Treasury securities now pay over
4% across the board, and so they’ve pulled $433 billion in cash out of banks
since April.
Banks
have begun to fight back to stop this cash drain, and they now offer CDs –
usually brokered CDs that you can buy only through your broker, not the bank
itself – of 4% and more.”
The axiom is that savers never transfer their
savings outside the banks unless they hoard currency or convert to other
national currencies, e.g., FDI. There is just an exchange in the ownership of
pre-existing deposit liabilities in the banking system, a velocity relationship. The NBFIs are the DFI’s customers. And they keep large balances in their banking relationships.
between an individual bank and the system. The equation, the capacity of a
single bank to create credit as a consequence of a given primary deposit (and
newly created deposits flow to other banks), is also applicable to a nonbank,
financial intermediaries. A bank: L = P
(1-d) & A nonbank: L = S (1-s)
But this comparison is superficial since
any expansion of credit by a commercial bank enlarges the money supply, enlarging
the system, whereas any extension of credit by an intermediary simply transfers
ownership of existing money within the system (a velocity relationship).
more alarming aspect of the federal deficits is not the effect on interest
rates but the effect of higher interest rates on the level of taxable income and
the volume of taxes required to service a cumulative debt now exceeding $31 trillion. Both higher interest rates and higher taxes induce stagflation, thus
eroding the tax base and increasing the volume of future deficits.
The burden becomes a function of the major portion of the debt, not just the
current deficits. The burden, in fact, becomes exponential. In other words, if
the trend is not stopped, the debt inevitably has to be repudiated.